Cost of Recruitment Calculator
Calculate your average cost per hire based on your total recruitment spending over a period and the number of hires made in that same period. This provides a simple benchmark for recruitment efficiency.
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Understanding Cost Per Hire (CPH)
What is Cost Per Hire?
Cost Per Hire (CPH) is a key recruitment metric used to measure the average cost incurred by an organization to fill an open position. It's calculated by dividing the total recruitment costs by the number of hires made within a specific timeframe.
Why Calculate CPH?
- Budgeting: Helps in forecasting future recruitment expenses.
- Efficiency: Benchmarks the effectiveness of recruitment strategies and processes.
- Decision Making: Informs decisions about allocating resources to different sourcing channels or recruitment technologies.
- Comparison: Allows comparison against industry standards or the company's own historical data.
What's Included in "Total Recruitment Expenses"?
For this simple calculator, "Total Recruitment Expenses" refers to the aggregate sum of all costs associated with your hiring efforts over the period you specify for the "Number of Hires". In practice, this can include (but is not limited to):
- Internal recruiting team salaries and benefits (pro-rated for time spent on hiring).
- Agency or headhunter fees.
- Job board postings and advertising costs.
- Background check and drug screening costs.
- Interviewing expenses (travel, meals).
- Relocation costs (if applicable).
- Software and tools used for recruitment (ATS, assessments).
- Employee referral bonuses.
For a simple calculation, ensure you are consistent in what you include in your total expenses figure for the relevant period.
Cost Per Hire Examples
Click on an example to see the calculation:
Example 1: Small Business Quarterly Hiring
Scenario: A small business tracks its recruitment costs for one quarter.
1. Known Values: Total Recruitment Expenses = $15,000, Number of Hires = 5.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $15,000 / 5
4. Result: CPH = $3,000.
Conclusion: On average, it cost this small business $3,000 to make one hire in that quarter.
Example 2: Tech Company Annual Report
Scenario: A tech company reviews its annual hiring costs.
1. Known Values: Total Recruitment Expenses = $500,000, Number of Hires = 100.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $500,000 / 100
4. Result: CPH = $5,000.
Conclusion: The average cost per hire for the tech company last year was $5,000.
Example 3: Retail Store Seasonal Hiring
Scenario: A retail store hires temporary staff for the holiday season.
1. Known Values: Total Recruitment Expenses = $8,000, Number of Hires = 20.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $8,000 / 20
4. Result: CPH = $400.
Conclusion: The cost per hire for seasonal staff was $400.
Example 4: Agency-Assisted Hiring
Scenario: A company uses a recruitment agency for some roles, increasing costs.
1. Known Values: Total Recruitment Expenses = $75,000 (includes agency fees), Number of Hires = 15.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $75,000 / 15
4. Result: CPH = $5,000.
Conclusion: Factoring in agency fees, the CPH was $5,000 for this batch of hires.
Example 5: Recruitment Drive
Scenario: A large company conducts a major recruitment drive.
1. Known Values: Total Recruitment Expenses = $1,200,000, Number of Hires = 300.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $1,200,000 / 300
4. Result: CPH = $4,000.
Conclusion: The average cost per hire during the drive was $4,000.
Example 6: Low Volume, High Cost Hires
Scenario: Hiring for specialized senior roles can be expensive.
1. Known Values: Total Recruitment Expenses = $150,000, Number of Hires = 3.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $150,000 / 3
4. Result: CPH = $50,000.
Conclusion: The high CPH reflects the significant investment per hire for these senior roles.
Example 7: Internal Recruitment Focused
Scenario: A company relies heavily on its internal team and referrals.
1. Known Values: Total Recruitment Expenses = $40,000 (mostly internal costs), Number of Hires = 20.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $40,000 / 20
4. Result: CPH = $2,000.
Conclusion: A focus on internal methods results in a lower CPH in this period.
Example 8: High Volume, Lower Skill Hires
Scenario: Hiring many employees for roles requiring less specialized skills.
1. Known Values: Total Recruitment Expenses = $60,000, Number of Hires = 120.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $60,000 / 120
4. Result: CPH = $500.
Conclusion: High volume, less complex hiring typically results in a lower average CPH.
Example 9: Startup's First Hires
Scenario: A startup makes its initial hires, incurring setup costs.
1. Known Values: Total Recruitment Expenses = $25,000 (includes initial software/tool costs), Number of Hires = 4.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $25,000 / 4
4. Result: CPH = $6,250.
Conclusion: Initial setup costs can lead to a higher CPH for early hires.
Example 10: Non-Profit Annual Recruitment
Scenario: A non-profit tracks its annual recruitment spending.
1. Known Values: Total Recruitment Expenses = $35,000, Number of Hires = 18.
2. Formula: Cost Per Hire = Total Expenses / Number of Hires
3. Calculation: CPH = $35,000 / 18
4. Result: CPH ≈ $1,944.44.
Conclusion: The average cost per hire for the non-profit was approximately $1,944.
Frequently Asked Questions
1. What is Cost Per Hire (CPH)?
Cost Per Hire is a metric calculated by dividing the total costs associated with recruitment over a specific period by the number of hires made in that same period.
2. Why is calculating CPH important?
It helps organizations understand the financial investment per hire, evaluate recruitment efficiency, aid in budgeting, and benchmark performance.
3. What costs should be included in "Total Recruitment Expenses"?
Ideally, it should include all costs directly related to attracting, sourcing, assessing, and hiring candidates, such as internal recruiter costs, agency fees, advertising, software, background checks, etc. Be consistent in what you include.
4. Does CPH vary by role or seniority?
Yes, typically hiring for more senior, specialized, or in-demand roles costs significantly more. This simple calculator gives you an *average* across all hires in the period you input.
5. What if I have zero hires in a period?
This calculator requires the Number of Hires to be greater than zero because you cannot divide total expenses by zero. If you have expenses but no hires, your CPH is undefined, or you could interpret it as a very high cost relative to results.
6. How often should I calculate CPH?
Organizations often calculate it quarterly or annually to track trends and evaluate changes in recruitment strategy or market conditions.
7. What is considered a "good" Cost Per Hire?
There is no universal "good" CPH. It varies significantly by industry, company size, location, roles being hired for, and economic conditions. Benchmarking against similar companies or your own historical data is most useful.
8. How can a company potentially reduce its CPH?
Strategies might include improving candidate sourcing efficiency, leveraging employee referral programs, optimizing the interview process, using cost-effective recruitment technologies, or building a strong employer brand to attract candidates organically.
9. Does CPH measure the *quality* of hire?
No, CPH is a measure of efficiency and cost. It doesn't directly tell you if the people hired are high performers or stay with the company long-term. Other metrics are needed for that.
10. Can I use this calculator for different currencies?
Yes, this calculator works with any currency. Just ensure that your "Total Recruitment Expenses" are entered in a single, consistent currency.
